Nmcn Share Discussion Threads

[squeamish1] 23/2/2021 14:36

What's another £5m loss between friends.

[cc2014] 03/2/2021 11:50

Just popping in. Another not very good RNS. What a mess.

[jwball] 05/1/2021 11:44

Is that not fraud?
Taking money out of a public company when it's not really there?

[squeamish1] 23/12/2020 10:25

Retained earnings of £18m at YE 2019. Loss of £16.5m in 2020. So essentially this company has never been profitable, and previous reported profits were lies. Apparently shareholders just have to hope that it will be genuinely profitable in the future, and maybe get a dividend in 2022 for their troubles.

I wait with electric anticipation for the announcement that they'll be clawing back the £5.2m performance pay given to the board in 2018 and 2019. Clearly, the performance was make-believe, but the bonuses were real.

[jwball] 23/12/2020 09:42

How poorly managed can a company be to not notice they've lost another £1.5 million?

[kemche] 23/12/2020 09:27

"2020 has unquestionably been a difficult year for the Group"

I'd say. And the prior years which were dressed up presumably.

[cc2014] 23/12/2020 08:38

What a mess.

[igoe104] 19/10/2020 15:12

I've taken a 50% loss and moved on after thinking about this share over the weekend. Too many unknowns for me, and we know results are going to be terrible. Topped up my GSK and Aviva holdings whilst they look cheap.

[cc2014] 19/10/2020 11:57

I am at a loss to understand who is buying this share at 200p

A loss of £13.5m wipes out the last 2 years profits but more concerning to me would be it suggests they have no clue from their management accounts what their real profit position has been for some time.

So, who can guess what underlying profits or losses they have in the work they are currently undertaking. My guess would be not very much. At best they revert back to making a couple of million a year. At worse they've got jobs they are currently working on which have no profit or losses. Even in the best case 200p looks looks pretty racy to me.

[igoe104] 16/10/2020 16:01

NEW Note Out.

shorturl.at/ekS35

[pugugly] 16/10/2020 13:56

Kinwah_ Very true - especially last sentence.

[kinwah] 16/10/2020 10:27

Possibly Pugugly but I wouldn't take the parallels with Van Elle too far. Nmcn has maybe 10 water company customers compared to hundreds of customers for piling services. The risks of building a water treatment plant are different from stabilising dodgy ground. Homer as incoming chief executive surely would have been involved in all day to day matters even if the chairman had stood back a little despite remaining executive. Homer had 30 years experience with competitors in the industry so it wasn't like John Lewis's CEO appointment of a complete industry outsider. Will there be further bad news? I hope not but Covid may cause further problems. My own feeling is that the problems at nmcn are a microcosm of the whole contracting industry and that Boris's plans for big infrastructure spending are set on very shaky foundations.

[pugugly] 16/10/2020 07:02

Look at Van Elle (VANL) for a very similar precedent - If follows the same path then (imo) still more rot to be uncovered and potentially further to fall with the need for significantly discounted rights offer -

Appears to show what happens only too often when the family - who have a very strict control over THEIR CASH step back and hand the reins to outsiders who may have a great city reputation but are very often too remote from the day to day nitty gritty and allow the wool to be pulled over their eyes.

[kinwah] 15/10/2020 23:48

Squeamish, reading the RNS carefully, I think the loss comes from costs incurred which for some reason are not recoverable from the water company customers. The contracts which in theory were profitable were actually loss-making over several years. The auditors would have difficulty uncovering issues like this if there was deliberate concealment by members of the management team. Let's hope the new auditors don't resign when they see what they've let themselves in for!

[squeamish1] 15/10/2020 16:04

So this loss they’ve magicked out of nowhere - a liability they didn’t account for, or a receivable that’s gone bad? Again the RNS fails to make anything clear. Well done BDO for waving the accounts through year after year and resigning five minutes before the skeleton flops out of the closet.

Cash balance obviously offers no downside protection here, now they’re having to gear up from a position where their tangible equity has now been wiped out to zero. The margins can’t support the interest rate they’ll have to pay.

I thought this was one company in the sector that stood a chance. No debt, no funny business in the balance sheet, steady revenues - if only they could tickle margins up slightly they’d be to the moon. But no, just another in a long line of value destroying contractors...

[jwball] 15/10/2020 11:38

Given the Financial Director was rewarded handsomely it looks like he's ridden off into the sunset. The rumblings I'm hearing point to more fundamental management problems or lack of.

[cc2014] 15/10/2020 10:20

The "new managment" by whom I think you mean Robert Moyle is the "old management". He and his family own around 50% of the company.

The challenge for him is that as far as I'm aware none of his family are now involved in the day to day running of the business and John Homer was brought in to provide some heavyweight leadership.

Now what's gone wrong is hard to tell but at best it would seem Homer was unaware of the huge losses on the water contracts or worse. It would also appear the previous FD hadn't got a scooby how to do accruals which seems unlikley so therefore presumably misled by his colleagues and insufficiently challenged by the FD.

The huge and rising cash balances would have given comfort to the Board profits were being generated but it now seems likely these must have been pre-payments or overclaimed applications for payment.

A quick look through the accounts (from two years ago?) where there was a £9m(?) exceptional gain for reasons I never really understood properly but seemed to relate to a change in the accounting rules might provide some insight. (I assumed this was money that was hidden for a rainy day but when the accounting rules changed they couldn't hang on to it).

[qs99] 15/10/2020 10:11

As you say, running big/long contracts just seems to be beyond the capabilities of so many UK companies: Kier, Costain, NMCN, any others who have had mahoosive profit warnings and restatements of previous accounts, you name it?

Really disappointed for all holders here as the management appeared to be good, but not so IMO....glad I sold last year.....GLA and hope you find other places that will swiftly make up the losses.

[battlebus2] 15/10/2020 10:08

Yes that’s a big concern.

[tabhair] 15/10/2020 09:45

"nmcn Plc ("the Company") announces that following a competitive audit tender process conducted in compliance with EU Audit Regulations and best practice guidelines, it has appointed Ernst & Young LLP as its external auditor with immediate effect, following BDO LLP's resignation as external auditor to nmcn Plc with effect from 30 July 2020. In accordance with s.520 of the Companies Act 2006, the Company has sent a letter to its Shareholders providing them with a copy of the requisite statement from BDO LLP confirming that there are no reasons or matters connected with their ceasing to hold office as Auditor which they consider should be brought to the attention of members or creditors of the Company."

You have to laugh.

Auditor gives NMCN a clean bill of health before resigning, just a few months later it turns out the books are a complete mess.

The whole sector is uninventable. If you run a company and don't take a risk in under-bidding on a contract, then someone else will do it. A race to the bottom where the shareholders end up suffering worst.

I suspect there is more bad news to come here. New management are just in place and if they are discovering bodies buried under the floor this early, there's likely more bad news to come.

[eezymunny] 15/10/2020 09:25

It's same old same old in the sector.

Big, hard to price contracts, on thin margins. In the end they all seem to get caught out. I've done well from this company over the years but boy, if there's ever a sector NOT to buy and hold this is it!

[kinwah] 15/10/2020 08:56

Igor misdirected may be a better word than misled. I knew there could have been a bump when they transitioned to the new water framework but it looks as if closing off the old framework has uncovered all sorts of nasties from previous years. Historically the water business had been steadily profitable but it now appears to have been just an illusion as prior year adjustments will wipe that profit out. In the rest of the business I was correct eezymunny that the risks were much better spread and that there wasn't a big problem contract but that is scant consolation for the water business not being the steady profit earner that the accounts had reported. I suppose positives are the company still has decent turnover and loyal clients but it has to sort out the board and rebuild trust.

[cc2014] 15/10/2020 08:42

What a mess. And the losses in the water sector too, the one area thought to be reliable and safe.

Sounds like there's some problem with the accruals process at year end?

[eezymunny] 15/10/2020 08:36

Looks like readers of this board were misled about the big cash balance offering downside protection etc. Just as well I was here to point out the risk that this was a ticking time bomb... Those that ignored me (pretty much everyone as usual) duly punished. As usual.